Quantum Bubble 2.0
Yup its happening again.
WE ARE BACK BABY.
Back to another quantum stock bubble, as we have learned nothing from the last one.
Back in late 2024 we saw the first quantum stock bubble. Here is what it looked like in December of 2024. Rocket ship up, and then as always a crash.
Why Quantum Computing will never be a viable technology
People are clearly confused about what Quantum computing is, and they are conflating it with High Performance Computing (HPC) which has allowed AI growth. Retail lemmings throw the term around as if it’s the next internet, the next AI, or the next leap in high-performance computing. It’s not.
Most of the “quantum hype” you hear is actually about specialized high-performance computing, often powered by ASICs. These chips are purpose-built for tasks like AI training, cryptography, heavy compute loads and they scale. This is what all AI workloads are built on.
Quantum computers don’t scale the same way as HPC. They are not general-purpose machines. They are designed for very narrow applications like factoring large primes, simulating quantum systems, or certain optimization problems. The key difference is HPC systems (using GPUs, TPUs, or ASICs) can be networked, expanded, and massively parallelized. This is how we get the exponential growth in AI training and scientific computing. ”
Quantum systems cannot be networked. Decoherence, error correction, and qubit stability are fundamental physics problems that prevent building a “quantum data center." So while HPC with ASICs can continue to scale with Moore’s Law alternatives (chip specialization, parallelization, networking), quantum computing will remain constrained to niche problem sets due to physics!
The reality is Quantum computing is narrow, domain-specific breakthroughs with extremely limited TAM. High-performance computing with ASICs = broad, scalable power. Confusing the two is how hype outpaces reality and you get a bunch of bag holding “QUANTUM is the Future” morons.
Honestly I think if High Performance Computing had a better name that was more distinct from traditional computing this would be less confusing to people.
If you want to go deep into the technical side of why Quantum Computing has physics problems I would read Martin Shkreli’s blog post on the technology from back in December during Quantum Bubble 1 (Link here)
To further nail home the point, just check out IONq status page, there are major outages almost everyday on their computers.
So how did we get back to a Quantum Bubble 2.0?
We can tie the recent re-bubble in Quantum stocks into a few main drivers.
1. Overall market liquidity increased and general market FOMO has increased since Tariff Day rebound pushing out duration appetite
Since the “Tariff Day” rebound, liquidity in markets has risen. Risk appetite has shifted toward more speculative and longer-duration assets, especially those tied to perceived technologically advancements like Quantum computing.
Investors searching for “the next Nvidia” or “the next AI wave” are looking further out on the risk spectrum. Quantum, with its promise of decade-out transformational computing, fits this narrative perfectly, even though near-term revenues remain negligible and the overall TAM is unlikely to ever materialize.
FOMO-driven liquidity flows are looking for sectors with explosive story potential rather than revenues or earnings, which mirrors the dynamics seen during past speculative bubbles (dot-com, EV SPACs, Cannabis), i.e. ShitCos are doing well right now.
2. Partial shift in Nvidia’s/Jensen’s commentary on Quantum (although I think their stance is opportunistic rather than believing in the technology)
Nvidia’s CEO Jensen Huang has begun weaving quantum into his broader AI/accelerator narrative, mentioning integration potential. While Nvidia is not a direct quantum player, its comments lend legitimacy to the space.
This gives retail and institutional investors alike a perceived “stamp of approval,” even if Nvidia’s actual exposure is negligible.
The shift is less about conviction and more about narrative capture: Nvidia benefits when investors believe all compute-intensive futures (AI, quantum, simulation) require more GPU infrastructure. That subtle endorsement is enough to turbocharge quantum stock flows.
3. Quantum promoters are out in full force
Youtube, fintwit pumps, research notes, and retail outlets are increasingly saturated with bullish narratives about quantum’s potential to “solve everything” from drug discovery to national security.
Promoters (like IONq’s CEO Niccolo de Masi) emphasize trillion-dollar TAMs without realistic commercialization timelines and glossing over actual physics issues that prevent Quantum for ever competing with HPC systems which are far superior in almost every way to Quantum systems.
Retail investors are being sold the vision that missing out on quantum is akin to missing out on AI — fueling a classic speculative marketing cycle.
4. Quantum stocks are high beta and algos like High Beta + Positive Momentum
The 4 major quantum names (IONQ, QUBT, QBTS, and RGTI) trade with very high beta to the Nasdaq and broader tech complex, meaning they move disproportionately on liquidity and sentiment shifts.
Quant-driven strategies and momentum algos mechanically chase these moves, reinforcing feedback loops. Once a stock enters the “high beta + momentum” basket, systematic flows drive it higher irrespective of fundamentals.
This dynamic creates parabolic moves untethered from underlying business progress — momentum begets momentum until the trade unwinds. The key there is until the trade unwinds, as it always does.
We saw a similar pattern with meme stocks, cannabis stocks, and speculative EV names, where algorithmic trading amplified bubble behavior.
This Quantum rebubble is a symptom of a market that is near all time highs with greedy behavior rampant across global markets. Trumps administrations willingness to not only look the other way on grift but actually fostering the grift themselves only further invigorated market participates boldness.
Path forward, how to play this Quantum bubble 2.0
With most speculative bubbles they are tied to overall market liquidity and positive momentum. EVs startups were tied to the 2021 post Covid Bubble and Cannibis stocks to the 2017-2018 market upward cycle. So the best way to play this is as a high beta short on the overall market topping.
First lets categorize the 4 horseman of the Quantum Bubbles as there is a bit of a distinction between them.
Ionq (IONQ) is actually the clear leader in the group from a technology breadth standpoint and has been acquiring any firms that are adjacent to them for the last few years. Their CEO is super promotional and makes some generally outrageous claims about their current and future capacity.
Rigetti (RGTI) is much more niche with really only a one Quantum computer in operation and they are behind IONq on almost all aspects of the development. The management is much more realistic in their projections of the capabilities of quantum and the timeline to achieve them. Management has also cautioned investors that the current valuation seems to not reflect their near term prospects.
D-Wave (QBTS) is similar to Rigetti but they don’t actually make Quantum Computers rather just annealers, which reduces their TAM even further vs an already small TAM of Quantum Computers. The company went public via SPAC in 2022, has been very promotional and raise money a few times including a large ATM around the first Quantum bubble.
Quantum Computing Inc. (QUBT) is an outright fake quantum company or a scam. It has a long history of chasing trends and dumping shares on the public when a trend hits.
In my opinion these are all way overvalued and deserve to be cut by 90% of their current share price, but if I had to put them in an order of best to worse it would be IONQ, RGTI, QBTS, and then QUBT.
Look out for the market turning, these are prime shorts to hit when it does. The borrow rates are pretty reasonable at all of them right now as well so a small short position here with a plan to add also makes sense to me.
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